Key Sources of Laws for Business Organizations in the UK

This report discusses the legal context for business organizations in the UK, including employment law, contract law, and vicarious liability. It also describes the different types of business structures in the UK, such as sole trader, general partnership, and limited liability. The report recommends partnership as the best option for expanding a business, due to its low investment and legal requirements.

BSc (Hons) Business Management
BMP4002 Business Law
Assessment 2
Report describing the key sources of
laws as the legal context for business
organizations in the UK
Submitted by:
Name:
ID:
Contents
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Introduction
Business organization is formed for the purpose of handle the commercial
enterprise. This business enterprise are different types like solo proprietorship,
partnership or limited- liability company. In this first form, solo proprietorship is a
single person own the entire business and manage the operations, as their personal
property, and usually managing their work on daily basis. Mostly people are doing
this types of business (Asai, 2020). The second form of partnership, are having
minimum two and maximum fifty people are doing business, this form is owned by
the partners themselves and receive carious shares of the profits according to their
investment. The third form of business corporate company, this type of company is
legally separate from the individual who is working for its, no matter whether they be
shareholder or employees. In this report there is the sole trader who operates IOM
solution, they selling electrical parts to local garages, so they wants to decide to
expand their business.
Businesses & Organizations in the UK
Management is very important for very type of business without this
organization are not able to achieve their target effectively and efficiently.
Management is the set of activities which include planning, organizing, leading,
decision making and controlling (Batalha, 2021). This things the helps the
organization to provide the right direction to achieve their goals effectively and
efficiently. If they want to expand their business,s o they need to require the legal
assistance and guidance, who helps them to avoid the liability and give the overview
of the different types of law which is applicable to the business operation in order to
simplify the things which are listed below:
Employment Law- This employment law helps to handle the various types issues
which is related to hiring process.
Contract law- This law related to the lease and purchasing the agreement, or
product sale contracts with the third- party vendors.
IOM solution company need to mange their transaction in proper manner, they need
to workflow the working environment of the business transaction mangmnet, which
include the following steps such as firstly identify the ares they interest, run traffic,
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discover the services and dependence, monitoring the needs of transaction in
access.
Vicarious liability- It is related to the situation where the one party is held the party
responsible for the unlawful actions for the third party and this third party is also
carries their own shares of the liability. There are two types of vicarious liabilities,
first is there are must be certain kind of relationship, second the wrongful at must be
related to the relationship in the different convinced way (Cott, 2021).
But IOM solution company need to be focus that they are not doing any
negligence,which affect the company performance. Negligence is the cornerstone of
tort liability, they need to be found the negligence which involves the breaching
duties that the business has towards others. The outcome of a negligence is against
the business which is depend on number of factors, defendant can claim that there is
not duty exists. If IOA solution company wants to expand their business, so they
need a directors to doing their business, along with it helps the company to
determining the strategy objectives and policies and monitoring progress towards
achieving the objectives and policies. Along with it also helps the company to appoint
the senior mangmnet, and analyzing the company activities. Directors hold the
business from where the manage they duty and perform truly. The liabilities of the
directors such as Breach of fiduciary duty, Ultra vires acts, Negligence and Mala fide
acts. Along with if the company not like the partnership or they want to dissolve their
partnership, so they need to doing legal procedure. Termination of partnership is
process by which the bond between the partner is terminated and comes to an end
all the assets. Company need to follow five steps to dissolve g the partnership such
as firstly review the partnership agreement, then discuss with their partners. After
this file the dissolution paper in court, then notify the others and lastly settle and
close all accounts.
Particulars MOA AOA
 Verbal description Its defines the company's
constitutions, their
objectives and constraints
of the organization.
Its defines the rule and
regulation of the company
which defines the duties
power, liabilities and rights of
the people associated with in
the organization.
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 Contents It contains five mandatory
clauses
It contains the provision
when they require
 Importance and
position
It is compulsory legal
documents and subordinate
to the companies act
Article of association is a
subordinate to the MOA
with in the companies act.
 Retrospective
amendment
The Memorandum
Association can be amended
with a retrospective effects
The Article of association can
be amended retrospectively.
 Contents The documents content the
name of the company,
registered office, object,
liability, capital and so on.
It contents detail regarding
the share capital, rules and
regulation of the company,
provision of borrowings,
detail regarding directors and
so on .
The legal business structure of UK companies
Sole Trader
Sole proprietorship is an unorganized business, which is owned by the one persona,
In this business owner is personally liable for all debts which is incurred by the
business (Yong Kim and Thuc, 2021). For example local general shops, IT
consultant and so on. It is easy to formation because they do not need much money
and legal work, single person can own herself, with limited liability. Along with sole
proprietorship are four types such as reseller, agent sales, retailers, exporter and
importer. Sole trader solely responsible for the increasing the business finance
(Formosa, 2018). They invest their own capital into their business, they report their
income and expenses on their personal tax returns and pay the self-employment
taxes on their revenue.
Advantage Disadvantage
 Easy to set up, they do not need high
investment to start their business,
single personal are doing this.
 Sole traders retain the all profits for
themselves. They do not need to
share their profit with others.
 Sole traders make all the decisions ,
themselves. This things help the
owner to take fast decision, there are
 Can be difficult to raise finance, it is
short business, so they take so much
time to increase their fiance, owner
can earn short amount profit.
 Unlimited liability, because of this the
bear all losses and sometime they
need to sale their personal assets to
bear the risk.
 Heavy workload, single person is not
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not chance to delay the work. handle to much work themselves,
they are not able to carry that much
load
General Partnership
The General partnership are not paying any income tax, because thy pass- through
entities which means the owner reports for the partnership's income and losses on
their personal tax return and pays their tax accordingly. General partnership is a
unorganized business, because it is own by two or more owner who shares business
duty and responsibilities. Both partner having unlimited personal liabilities for their
debts and each of them reports their share of business revenue and losses of their
personal tax return (Ivanov, Zavyalova and Ryazantsev, 2019). There are some
feature of general partnership such as Joint liability, fiduciary duties, mangmnet and
control in a general partnership, compensation and taxes.
Advantage Disadvantage
 Easy to start they do not need much
legal work to start their business like
no registration required, they can
start their business without this.
 This general partners are not pay
taxes, because their business profit
and losses pass through the owner's
personal tax returns.
 The compliance is relatively easy,
because they don't wants to make
annul reports
 This partner are customize the
mangmnet and control some extent
in a partnership agreement.
 This partner having a unlimited
personal liability for the activity for
the other partners and employees.
 Sometime there are some dispute
among partner and this is not for the
business performance, particular in
the absences of a partnership
agreement.
 This is not the appropriate business
structure for raising inventory
money.
Partnership
Partnership business is one of the most common forms to run their business in the
UK, and most common alternatives are the sole traders and limited company.
Partnership is an agreement which is made by the two or more parties, who mange
and operates the company and achieve the target. Their are many types of
partnership arrangements. In this partnership business, all partners are share their
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liabilities and revenue equally, except those partners having limited liability and there
are tax benefits for a partnership compared to corporation (Rye, 2020). Partnership
are different from others, because that involves the two or more partners, along with
it include the contractual agreement, between all the partners. It include the
distribution of ownership and responsibilities and profit and losses, it clearly defines
the business relationship and responsibilities.
Advantage Disadvantage
 Less formal and less legal obligations
is the biggest benefit of the
partnership business because it is the
lack of formality compare with the
managing limited company.
 Easy to get started the partners can
easily and fast start their business,
because they are not need to
register.
 Sharing the work load, this is the best
things that one person are not
handle all things singly, there are
work together and share the burden
which is good for their performance,
 Unlimited liability is the biggest
disadvantage for this, the partners
are personally liable for debts and
losses incurred. If the business is not
god they have to bear risk by selling
their personal assets.
 Another thing they have to face is
decision making, because of this
decision are slow and face difficulty
to take them , different person
having a different point view, so
sometime its create conflict.
 Profit must be shared, if the company
doing partnership, so they need to
share their profits with their partners
Limited Liability
It is related to the legal structure of the company where the corporate the losses will
not exceed the amount of investment partnership. In this process those partner
having the lilted liability, then they are not having the risk to sale their personal
assets. Limited liability is the biggest benefits for the those people who are investing
publicly listed companies.
Advantages Disadvantage
 Helps to minimize the liability
 Helps to improve the image of the
company, when they start trading as
a limited.
 Get the higher personal
remuneration
 The partner can not set up the
limited company, because if they
disqualified as a director.
 Personal and corporate information
will be disclosed on public record.
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Recommendations for IOM Solutions
If Sam wants to expand their business globally and earn, more profit in future,
so partnership is the best method to enhance their business, because they having a
less risk and other personal also helps them to bear the risk. They both are capable
to to handle the work load and also they don,t require the high investment to start
their business (Smith, 2022). Along with they don, require high knowledge, expertise
and resources to start their business and make a good products and reach the large
number of audience. Sam also get more options in partnership such as solo
partnership, general partnership, limited partnership, corporation and others. They
can choose according to their needs. It also helps the Sam to give the bets
opportunities to expand their business. COVID-19 time they offers the more global
approach to developing the new business remotely.
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Conclusion
In this report went into detail regarding that how the sole trade, expand their business. In
this report it give the brief disruption of types of business organization, and choice them
which are potentially available in the terms of reorganizing IOM solutions. Partnership is the
best option for the Sam, because they do not need much knowledge and investment, along
with they also nit much require legal work. This the best thing because legal work is time
consuming process. If the Sam using this method, so they can able to expand their business
and attract the new costumer which is beneficial for their future goals.
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References
Books and Journal
Asai, K., 2020. Limited liability and corporate efficiency. International Review of Law and
Economics, 62, p.105886.
Batalha, J.R.M., 2021. O EMPRESÁRIO EM NOME INDIVIDUAL vs SOCIEDADE UNIPESSOAL.
QUAL A FORMA JURÍDICA A OPTAR? (Doctoral dissertation, Universidade de Coimbra).
Cott, P., 2021. Legal matters: What is the best business structure for you?. Electrical
Connection, pp.36-37.
Formosa, A.M., 2018. From a sole trader to a company: a legal and financial
analysis (Master's thesis, University of Malta).
Ivanov, O., Zavyalova, E. and Ryazantsev, S., 2019. PUBLIC-PRIVATE PARTNERSHIP IN THE
COUNTRIES OF THE EURASIAN ECONOMIC UNION. Central Asia & the Caucasus
(14046091), 20(2).
Rye, J., 2020. What is the difference between a sole trader and a limited company?.
In Setting Up and Running a Therapy Business (pp. 132-134). Routledge.
Smith, C.E., 2022. Inevitable partnership. In Inevitable Partnership. Lynne Rienner
Publishers.
Yong Kim, S. and Thuc, L.D., 2021. Life Cycle Performance Measurement in Public–Private
Partnership Infrastructure Projects. Journal of Infrastructure Systems, 27(4), p.06021001.
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